Illegal immigration: What's the real cost to taxpayers?

By Edward Schumacher-Matos
Thursday, September 9, 2010

In 1909, at the height of the last great immigration wave, when immigrants reached a peak of almost 15 percent of the U.S. population, they made up about half of all public welfare recipients.

They were two-thirds of welfare recipients in Chicago.

In the country's 30 largest cities, meanwhile, more than half of all public school students were the children of immigrants. They were three-fourths in New York.

This history is forgotten in the angry debate over the cost to taxpayers of unauthorized immigrants and their children today. My recent column reporting that unauthorized immigrants were making unexpectedly large contributions to Social Security, for example, led to denunciations that I was being misleading by not looking at the total fiscal picture.

The truth is that unauthorized immigrants are probably a net burden on taxpayers in the short term, but only if you consider education as a cost and not as an investment in the nation's future, as it was seen a century ago.

Compared with native-born Americans, moreover, immigrants here illegally receive far less in welfare and other government benefits, making them a closer fit than many of our ancestors to the mythic image of the immigrant coming for opportunity and not a handout.

Any fiscal look additionally has to be placed in the context of overall economic contribution. Economists overwhelmingly agree that the unauthorized contribute to the nation's economic growth -- and thus income for most Americans, though wages for unskilled workers suffer. None of this is to say that we should allow illegal immigration. As Milton Friedman once noted, you can't have open borders and hope to maintain generous government benefits for your citizens.

Fortunately, the flow of new undocumented immigrants is abating, in part because of the recession but also because of greatly improved border enforcement. The Pew Hispanic Center reports that the estimated average annual number of border jumpers between March 2007 and March 2009 was a third of what it was between 2000 and 2005.

What all this suggests is that public anger over the unauthorized already living here has less to do with history and economics and more with what Harvard political philosopher Michael Sandel says is the special "outrage" citizens feel when they believe people are getting something they don't deserve.

"What part of 'illegal' don't you understand?" goes the moral cry. But it ignores a competing moral. Until recently, illegal immigration was encouraged by American business and tacitly accepted by government as a needed temporary worker program in lieu of a legal one that didn't exist. Still doesn't.

But you ask: What is the fiscal balance, anyway? No one knows. The brunt of the impact is state and local, particularly because of education, and no definitive study has been done. Services and the methodology in the few existing state studies vary widely. We have only estimates, mostly by partisans who impose their values over how to count children, parse enforcement costs and the like.

The most insightful study remains one done by the National Research Council in 1997. It gauged federal, state and local fiscal costs and contributions over the lifetime of an immigrant in 1996 dollars. Citizen children were included.

The study found that an immigrant high school dropout -- which characterizes nearly half of today's unauthorized people -- received $89,000 more in services than he paid in taxes in his life. But an immigrant with at least some college -- a quarter of today's unauthorized -- gave $105,000 more than he got. For the high school graduates left, those who arrived during their teens or earlier were slightly profitable for the government, while the children of those who arrived later paid off the small deficit of their parents.

The orders of magnitude are more important than the precise numbers. A tough federal law passed in 1996 has since cut almost all benefits to unauthorized immigrants. Even the Center for Immigration Studies, which advocates forcing out immigrants here illegally, acknowledged that the average undocumented household in 2002 received fully 46 percent less in federal benefits than an American one. But this likely would go up with legalization.

So, the main question may be: Are they deserving? Look around you at the people whose European-born ancestors were on the dole and overcrowding schools a century ago. You decide.

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